Free Trial
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
US
- One of the major factors behind the rising popularity of the 60/40 equity bond allocation and the risk parity strategy was the significant positive shift in the equity bond correlation in the late 1990s.
- The chart below shows the evolution of the 3-year rolling correlation between US equity returns and changes in the 10Y yield; a rising positive correlation would imply that investors owing bonds would get 'protected' from equity drawdowns in risk-off periods.
- One major problem that we have observed in recent years is that with interest rates approaching 0% in the US, participants have been asking themselves if bonds will still serve as a good hedge against uncertainty and rising price volatility in the future.
- We saw that the 'All-Weather' risk parity and 60/40 portfolios were down 28% and 18%, respectively, from peak to trough during the March 2020 panic.
- How much protection do bonds really offer if inflationary pressures continue to increase in the medium term?
Source: Bloomberg/MNI
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
We are facing technical issues, please contact our team.
ok
Your request was sent sucessfully! Our team will contact you soon.
ok